Russian President Dmitry Medvedev on Saturday proposed Vladimir Putin as presidential candidate for 2012, almost certainly guaranteeing Putin's return to office four years after he was legally forced to step aside.

Medvedev made the proposal in an address to a congress of United Russia, the pro-Kremlin party that dominates Russian politics.

There was no immediate official reaction from Putin or the party, but the proposal brought a heavy round of applause from the congress delegates. The congress must formally nominate its candidate.

The proposal appears to end months of intense speculation over whether Medvedev would seek a second term or step aside in favour of his powerful predecessor.

Putin became prime minister in 2008 after two terms as president, stepping aside because of constitutional term limits. But as Russia's most powerful and popular politician, he had been widely expected to seek a return to the Kremlin.

Under constitutional changes, the presidential term in 2012 will be six years instead of four, putting Putin — if he wins — in a position of nearly unchallengeable power.

Putin, who built his popularity on the back of strong economic growth, told the party congress on Friday that salaries and pensions would continue to grow, and he promised increased funding for education, health care and housing.

But he also cautioned that the government may need to take unpopular steps to cope with the global financial turmoil.

"The task of the government is not only to pour honey into a cup, but sometimes to give bitter medicine," Putin said. "But this should always be done openly and honestly, and then the overwhelming majority of people will understand their government."